Is IMTX A Good Stock To Buy Now According To Hedge Funds?

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Immatics N.V. (NASDAQ:IMTX) to find out whether there were any major changes in hedge funds’ views.

Is IMTX a good stock to buy now? Money managers were becoming hopeful. The number of long hedge fund positions rose by 22 in recent months. Immatics N.V. (NASDAQ:IMTX) was in 22 hedge funds’ portfolios at the end of the third quarter of 2020. Our calculations also showed that IMTX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.

Joseph Edelman of Perceptive Advisors

Joseph Edelman of Perceptive Advisors

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now let’s analyze the latest hedge fund action encompassing Immatics N.V. (NASDAQ:IMTX).

Do Hedge Funds Think IMTX Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 22 from one quarter earlier. The graph below displays the number of hedge funds with bullish position in IMTX over the last 21 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Nantahala Capital Management was the largest shareholder of Immatics N.V. (NASDAQ:IMTX), with a stake worth $27 million reported as of the end of September. Trailing Nantahala Capital Management was Perceptive Advisors, which amassed a stake valued at $26.5 million. Redmile Group, Alyeska Investment Group, and 683 Capital Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Beryl Capital Management allocated the biggest weight to Immatics N.V. (NASDAQ:IMTX), around 0.94% of its 13F portfolio. Sphera Global Healthcare Fund is also relatively very bullish on the stock, dishing out 0.83 percent of its 13F equity portfolio to IMTX.

As one would reasonably expect, key money managers have been driving this bullishness. Nantahala Capital Management, managed by Wilmot B. Harkey and Daniel Mack, assembled the most outsized position in Immatics N.V. (NASDAQ:IMTX). Nantahala Capital Management had $27 million invested in the company at the end of the quarter. Joseph Edelman’s Perceptive Advisors also made a $26.5 million investment in the stock during the quarter. The other funds with brand new IMTX positions are Jeremy Green’s Redmile Group, Anand Parekh’s Alyeska Investment Group, and Ari Zweiman’s 683 Capital Partners.

Let’s go over hedge fund activity in other stocks similar to Immatics N.V. (NASDAQ:IMTX). These stocks are Himax Technologies, Inc. (NASDAQ:HIMX), Meta Financial Group Inc. (NASDAQ:CASH), Conduent Incorporated (NASDAQ:CNDT), National Western Life Group Inc. (NASDAQ:NWLI), GameStop Corp. (NYSE:GME), AAR Corp. (NYSE:AIR), and SunOpta, Inc. (NASDAQ:STKL). This group of stocks’ market values match IMTX’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HIMX 6 42466 -3
CASH 6 41879 -10
CNDT 16 185777 -5
NWLI 7 10294 0
GME 28 164392 9
AIR 18 43968 -1
STKL 13 253119 0
Average 13.4 105985 -1.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.4 hedge funds with bullish positions and the average amount invested in these stocks was $106 million. That figure was $162 million in IMTX’s case. GameStop Corp. (NYSE:GME) is the most popular stock in this table. On the other hand Himax Technologies, Inc. (NASDAQ:HIMX) is the least popular one with only 6 bullish hedge fund positions. Immatics N.V. (NASDAQ:IMTX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for IMTX is 68.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and beat the market again by 15.8 percentage points. Unfortunately IMTX wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on IMTX were disappointed as the stock returned -8.9% since the end of September (through 12/14) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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Disclosure: None. This article was originally published at Insider Monkey.